MSME Registration

MSME Registration

MSME is an acronym for Micro, Small and Medium Enterprises. These are basically small-sized businesses defined in terms of their investment. In order to boost entrepreneurship certain incentives and concessions are given to the organization and in order to avail all the benefits under the scheme the organization has to get registered under the Micro, Small and Medium Enterprises (SMEs) act.

Classification of the MSME with respect to the ceiling on Investment in Plant and Machinery (in Rs)

• Micro Enterprises – Below 25 lakhs rupees
• Small Enterprises – 25 lakhs to 5 crores rupees
• Medium Enterprises – 5 crores to 10 crores rupees

For the service sector, the investment limits are Rs 10 lakh, 2 crores and 5 crores in terms of investment made in equipment. In 2015, the government has introduced an amendment bill to enhance the investment limit in all categories.

The major advantages of MSME scheme are :

1. Subsidies from State Governments: Most states offer those who’ve registered under the MSMED Act subsidies on power, taxes and entry to state-run industrial estates. In particular, there is a sales tax exemption in most states and purchase preference on goods produced.
2. Tax Advantage: Depending on the nature of your business, an exemption in excise as well as exemption from certain direct taxes in the initial years of your business.
3. Easy Loans: All banks and other financial institutions recognize MSMEs and have created special schemes for them. This usually includes priority sector lending, which means that the likelihood of your business being sanctioned a loan is high, and lower bank interest rates. There may also be preferential treatment in case of delay in repayment.

Services provided by the government to MSME include:

1. Provision of training facilities
2. Hire-purchase of machinery for use in MSME
3. Assistance in marketing, both within the country and outside (exports)
4. Extended credit facilities
5. Industrial extension support and services
6. Availability of developed sites for warehouse construction

The MSMEs are classified in terms of investment made in plant and machinery if they are operating in the manufacturing sector and investment in equipment for service sector companies. Though the primary responsibility of promotion and development of MSMEs is of the State Governments, the center has passed an Act in 2006 to empower the sector and also has formed a Ministry (Ministry of MSMEs). It was the Micro, Small and Medium Enterprises Development (MSMED) Act that was notified in 2006 that defined the three-tier of micro, small and medium enterprises and set investment limits.

Document Required

Documents Required for MSME Registration are:

1. Business Address Proof
2. Copies of Sale Bill and Purchase Bill
3. Partnership Deed/ MoA and AoA
4. Copy of Licenses and Bills of Machinery Purchased